Medical industry to move from ‘sick’ care to focus on ‘health’ care

A paradigm shift in the way medical care is paid for and administered will occur during the next decade or so, healthcare consultant Eric Shell told Talk Business & Politics.

Shell recently gave a lecture, The Future of Healthcare: Strategies for Success,” at the Fowler Center on the Arkansas State University campus. New York Institute of Technology College of Osteopathic Medicine hosted the event.

Shell is the chairman of Stroudwater Associates, a Maine-based healthcare consulting firm that provides research and strategy for rural and community hospitals, health systems and large physician practices. He is the leader of the firms rural practice and chairman of the firms board of directors.

With nearly 30 years of experience in healthcare financial management and consulting, Shells areas of focus include assisting rural hospitals, rural health clinics, and physician group practices to improve financial and operational performance and develop strategic and operational plans.

Rural and community-based hospitals and physicians who practice in those areas are facing very unique challenges,” said Shane Speights, dean of NYITCOM at A-State. Mr. Shell did an excellent job explaining the current landscape and providing perspective on future models that will impact the delivery of care across the country. Its a conversation that is extremely important in a largely rural state like Arkansas, which sits in the heart of one of the most medically-underserved regions of the country.”

Many shifts in the healthcare sector are expected between now and the mid-2030s, Shell said. The U.S. system has primarily been a sick care” system and it is poised to turn into a healthcare” system. Patients are typically treated for ailments after they become ill instead of taking preventative steps to stop the illness from occurring, he said.

Federally-funded healthcare programs are going to focus on primary care physicians and their clients as opposed to a system that treats patients after they become severely ill. Preventative medical procedures and practices will become the norm, he added.

We have a good sick care system. We need to transition to an actual healthcare system,” he said.

About one-third of U.S. household income is now dedicated to healthcare, a dramatic rise during the last 20 years, Shell said. The average family of four now spends $22,000 per year on it.

Some of the largest companies in the world such as Amazon and Walmart are getting into the primary care physician space because the trend lines are pointing toward them becoming the revenue centers” in the sector. There have already been steep declines for in-patient hospital services and that will continue.

Rural healthcare systems in places like Northeast Arkansas and primary care physicians in the areas could be uniquely positioned to benefit from this sea change in the industry, Shell said. He said rural hospitals already provide about 70% of their services on an out-patient basis. Margins in rural hospitals have actually grown by 2% in recent years while the industry as a whole has been down about 8%, Shell said.

I think the value in these rural healthcare systems will go up,” he said.

The system will morph into something completely different than what occurred in the 1990s, he said. Hospitals and other healthcare providers made more money by testing and providing services that were billable through federal and private insurance programs.

Doctors and preventative care were to a degree left out of the decision process. Insurance companies made money while the two entities that should have been involved in the quality and cost components, hospitals and doctors, were not incentivized to maintain quality and keep costs lower, he said.

The final outcome for the patient wasnt the objective; it was to provide as much billable service as possible, he said. In the future healthcare, providers will receive monetary compensation for the better outcomes of their patients.

Technological advancements will play an integral role in the industrys transformation. Telemedicine options are expanding and many of the large companies that are coming into the space are expanding those options, he said.

Shell said he thinks there will be an aggregation of services for patients under the primary care physician umbrella. For instance, a patient might see a physical therapist, a dietitian or even a psychologist in their primary care physician’s office.

Primary care centers will be the revenue centers of the future,” he said. Local, delivered healthcare systems will have higher values in the future.”


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